Is It A Good Idea To Start A Business With A Loan From A Bank?
NBFCs offer entrepreneurs business loans to raise immediate capital. Know the benefits of starting a business with a bank loan at IIFL Finance.
Business Loans are loan products that create a legally binding contract between the borrower and lender, where the lender agrees to provide a certain amount to the borrower against the promise of repayment. Entrepreneurs take business loans to cover numerous company expenses, ranging from working capital, buying real estate, marketing, or expansion. Once the lender disburses the loan amount into the borrower’s bank account, they become legally liable to repay the business loan amount with interest to the lender within the loan tenure.However, like other types of loans, the entrepreneur must repay a business loan for starting a new business through monthly EMIs. Since the nature of business is dynamic, the cash flow may become negative, forcing the entrepreneur to default on the repayment. Such situations create a dilemma, especially for an entrepreneur looking to avail of a business loan to start a business.
If you are an entrepreneur looking to take a loan to start a new business, it is important to understand if it is a good idea to avail of business loans to start a small business and if you should take the loan from a bank or an NBFC.
Is It A Good Idea To Start A Business With A Loan From Bank?Entrepreneurs looking to avail of a loan to start a new business have two options: take a loan from the bank or a reputed and experienced NBFC. When comparing both institutions, new-age NBFCs are more flexible and include innovative and comprehensive business loan products.
Banks must adhere to the rigid guidelines the Reserve Bank of India laid out, which do not apply to the NBFCs. This way, NBFCs can offer entrepreneurs business loans through an online application process that allows them to raise immediate capital.Here are the benefits NBFCs provide business owners when choosing an NBFC business loan to start a new business.
• Immediate CapitalNBFCs provide business loans for entrepreneurs to raise immediate capital through a quick and straightforward business loan application process. The application process is entirely online, which requires filling out some basic details and submitting a few KYC documents.
• Quick ApprovalUnlike banks, which may take days to approve the business loan amount, a business loan to start a business taken from an NBFC takes less than 30 minutes to approve. Since the core business of NBFCs is to offer such business loans, they employ a host of experts to review the loan application form quickly, which results in a quick approval of the loan application.
• Quick DisbursalOne of the best features of taking loans to start a new business from NBFCs lies in their quick disbursal process. When you take a business loan from a reputed and experienced NBFC, the review process assures the loan approval within 30 minutes. After the loan is approved, the quick disbursal process ensures that the business loan amount is credited into the borrower's bank account within 48 hours.
• Nominal Interest RatesBusiness loans have attractive and affordable interest rates without unnecessary or hidden costs. The nominal interest rates on a business loan ensure that entrepreneurs can pay the amount without creating a future financial burden because of the loan repayment liability.
• Flexible Loan RepaymentBusiness loans from NBFCs offer flexible repayment options to entrepreneurs to ensure that the EMI repayments do not create a financial burden on the business. The repayment structure for business loans is generally flexible and offers multiple repayment modes, including standing instructions, NEFT Mandate, ECS, Net-banking, UPI, etc.
What Are The Eligibility Criteria To Take A Business Loan From An NBFC?Once you know the ideal way to get a business loan from an NBFC to start a business, it is essential to fulfil the set eligibility criteria. Here are the eligibility criteria to take a business loan from an NBFC:
• Established business operating for more than six months at the time of application.
• Minimum turnover of Rs 90,000 in the last three months from the time of application.
• The business does not fall under any category or list of blacklisted/excluded businesses.
• The office/business location is not on the negative location list.
• Charitable organisations, NGOs, and trusts are not eligible for a business loan.
Avail Of An Ideal Business Loan From IIFL FinanceIIFL Finance is India’s leading financial service provider NBFC that specialises in a host of loans with a unique focus on business loans targeted toward starting a new business. IIFL Finance business loan offers instant funds up to Rs 30 lakh with a quick disbursal process online and minimal paperwork. The loan’s interest rate is attractive and affordable to ensure the repayment doesn’t create a financial burden.
Q.1: How much time does it take for the IIFL Finance business loan disbursal?
Ans: The business loan is approved within 30 minutes and is disbursed within 48 hours.
Q.2: What is the interest rate for taking a business loan with IIFL Finance?
Ans: The interest rate for IIFL Finance business loans ranges between 11.25%-33.75% depending on the loan amount and the loan tenure.
Q.3: Is there any need for collateral for taking a business loan from IIFL Finance?
Ans: No, there is no need to pledge any asset as collateral to take a business loan from IIFL Finance.